March Financial Fitness Challenge--Spring Clean Your Records

Few things focus our attention on finances and recordkeeping as effectively as doing our taxes. I got a wake-up call this year as I collected the paperwork to file mine: I keep too much paper.

At some point I realized I had about 95% of what I needed to file my return—tracking down that final 5% led me through piles of paper clutter and wasted a lot of time. And by the way, I'm actually pretty well organized. So frustrating.

In trying to track down the record of some items I'd donated last year to Goodwill, I came across pounds of paper that could be thrown away easily—stuff I didn't need to keep in the first place.

Note to self: Junk mail doesn't get more valuable if you hang on to it. When you get junk, don't even open it—put it in your recycling container right away. The only exception is credit card and other financial offers that you shred before recycling or discarding.

Another way to cut down on junk is to limit what comes to your home in the first place. The Federal Trade Commission has suggestions about "where to go to 'just say no,' " and you can sign up at catalogchoice.org to slash the number of catalogs you receive.

Time and trouble

A lot of the paper I sifted through was stuff that made sense to keep in the first place but was well past its usefulness. The problem is, you have to re-read each piece to decide what to do with it, and that sucks time. One easy solution: Decide how long you need to keep something when it's fresh and mark the "dump date" in the top right corner.

Say I'm keeping a receipt for a handheld vacuum that has a 180-day warranty. I note a date on the receipt six months away. That way I won't be staring at the receipt two years from now, clueless as to why I kept it and wondering if I still need to. I tape or staple the receipt to the owner's manual.

I also like to file things with a highlighter at the ready. For example, if I keep a credit card statement in my tax tickler file because it records a deductible charitable donation, I highlight the donation. Next year, I'll know at a glance what transaction that statement supports.

It's not always easy to decide what to keep and for how long. I try to focus on two simple questions:

Does somebody else have this information, and

Can I easily/quickly get a copy of it?

So, I know that lab reports from my last physical are online at my clinic—no need to keep a paper copy. No need, either, to keep a gas and electric bill once the new bill arrives, showing payment for last month's bill.

You typically need to keep things longer if you'll need them to back up tax returns or to prove you paid for something—improvements to your house, for example. There are lots of websites with advice about that, so you don't have to memorize those rules.

Shred credit card and other financial offers before recycling or discarding.

And the good news is, the longer it's been since you did a big purge of your paper clutter the easier it will be to get rid of most of it. Just don't get sidetracked on memory lane—if something is old and useless, it goes: Recycle, trash, and shred when appropriate.

Anything with information that someone could use to take advantage of you, or use to gain access to your financial accounts, should be shredded. Limit having that kind of information by going paperless as much as you can for bills, financial statements, and so on.

Here's some irony. The donation document I couldn't find was already online, where I'd filed it to get ahead of the tax-filing project.

Financial Fitness Challenge

You can do so much online these days, that alone can make a big dent in your paper clutter. Keep less, and you have less to keep track of. See what online credit union services you can use to reduce your paper clutter.

The people at your credit union bring you this website and other tools to help you make the most of your financial resources. The Financial Fitness Challenge continues to look at ways you can make better financial habits no matter what condition the economy is in.

Each month we randomly select five winners to receive $50 Visa gift cards; we choose each month's winners only from that month's entries, so enter often. Remember to register for the Financial Fitness Challenge.